Itau Bank Analysts Are Not So Optimistic About Petrobras

From the blog Iconoclastas, here is the bank analysis on the Brazilian oil giant:

“When we go back to oil-industry fundamentals, it is impossible to dispute Petrobras long-term potential. Geared by that potential, the DCF analysis of Petrobras usually leads to material upsides. But for the potential to materialize, the current level of investments will likely have to continue far longer than the strategic 5-year-plan horizon, in our opinion. A good portion of the upside in our previous model was based on the assumption that, by the end of the strategic plans horizon, the company would be able to reduce capex significantly, which we now view as over-optimistic…”

“In summary, while acknowledging that valuation looks more attractive against peers and that all the technicals look encouraging, we maintain our market-perform recommendation for Petrobras…”